Marginal Analysis

Read this article to learn about one of the fundamental terms in economics: marginal analysis. Specifically, understand the concept of marginal benefit and marginal cost and what is meant in economics when we say that individuals make rational choices at the margin. Also, complete the problems in the "Try It" box and check your answers.

Try It

  1. Suppose the relationship between your study time and your grade on a History midterm is given by the following table:
If you study forYour grade will be
4 hours82
5 hours91
6 hours94

What is the "marginal grade improvement (MGI)" of the 5th hour of studying?

____ points

2. What is the "marginal grade improvement (MGI)" of the 6th hour of studying?

____ points

3. Why might the MGI be diminishing?